Tag Archives: Corporate Tax Rate

A giant sucking sound, louder than a freight train, noisier than a tornado, shriller than Ross Perot yelling, “I told you so,” blasted across the nation Thursday as Republicans in the U.S. House passed their tax plan.

It was the terrible sound of jobs swept out of this country. When Perot ran for president, he said the North American Free Trade Agreement (NAFTA) would siphon off American jobs. And he was right. It did.

PHOTO BY STEVE DIETZ, UNIONPIX.COM

But this is much, much bigger.

House Republicans approved a scam exempting corporations from all taxes on their foreign operations. Under the GOP proposal, corporations like Carrier and Rexnord can benefit from protections provided by American patents, courts and armed forces, while moving their factories from the United States to Mexico. Or to other low-wage, high-polluting countries like China. Or to countries that charge little or no corporate tax. Once there, instead of paying the new, super-low 20 percent corporate rate Republicans propose for U.S-based producers, the expat factories will pay no taxes to the United States. Nothing. Not a cent.

Rather than Making America Great Again, Congressional Republicans plan to Make America Grieve Again as even more family-supporting factory jobs get shipped offshore to take advantage of the new tax rate of zip.

The math behind that job transfer is simple. Continue manufacturing in the United States and pay a corporate income tax dramatically lowered from 35 to 20 percent. Or move to a ridiculously low-tax country like Switzerland, Montenegro or Paraguay, and pay a measly 9 percent to that nation and nothing to the United States.

With the proposed corporate tax gift from Republicans, CEOs could uproot factories in places like Illinois, Indiana and Western Pennsylvania and ship them to brand new facilities in Bermuda, Palau or Turks & Caicos, where the corporate tax rate is zero. The corporation would pay no taxes on profits to the country hosting the factory and nothing to the United States, which hosts the headquarters.

Republicans contend such corporations will bring those foreign profits back to the United States and invest here. Why would CEOs do that when any American plant they invest in would be billed taxes on profits while the same factory located in certain other countries would pay nothing?

Why would they do that when they didn’t before?

Right now, corporations are sitting on $2.6 trillion in overseas profits. They have not invested that money in U.S. research, factories or jobs because they don’t want to pay the current 35 percent tax rate that would be charged when those profits are returned to the country.

To lure that money back, Republicans propose to give corporations a tax holiday, cutting the rate to between 5 and 12 percent for repatriating the $2.6 billion. The GOP insists corporations will take advantage of that tax deal to bring those billions home and invest in American production. But they won’t. The proof is that they didn’t last time.

Congress gave corporations a tax holiday in 2004 during which CEOs could return foreign profits to the United States and pay a mere 5 percent tax on them in exchange for investment in U.S. research, factories and jobs.

CEOs brought back the money and grabbed that 5 percent rate, alright. But they didn’t use the repatriated cash to conduct research, build factories or create jobs. Just the opposite.

A study by the Democratic staff of the Senate Permanent Subcommittee on Investigations found that the 15 corporations that benefited most from the tax holiday turned around and cut more than 20,000 jobs and diminished their pace of research spending.

Labeling the 2004 tax holiday a failed policy, the report cautions against repeating it, saying it cost the U.S. Treasury $3.3 billion in lost revenues over 10 years and led to U.S. corporations sending more funds offshore.

“There is no evidence that the previous repatriation tax giveaway put Americans to work, and substantial evidence that it instead grew executive paychecks, propped up stock prices, and drew more money and jobs offshore,” said former Michigan Senator Carl Levin, then-chairman of the subcommittee, when the report was released in 2011.

So the contention that corporations now would invest in U.S. research, factories and jobs because Republicans plan to give them another tax holiday is about as solid as smoke — the stuff emitted from American factories pre-NAFTA and now flowing from mills moved to Mexico. The same goes for the contention that corporations will invest in U.S. research, factories and jobs with completely untaxed foreign profits.

In fact, suspending taxes on foreign profits would create a perverse incentive for corporations to make it overseas instead of making it in America. But Republicans intend to do it anyway.

Republicans say they must cater to the tax demands of corporations because other countries – Germany and Ireland, for example – offer corporations low rates. And those same Republicans contend they must cease charging American corporations taxes on their foreign operations because other countries have stopped.

That describes a race to the bottom. Pretty soon, corporations won’t pay any taxes at all, anywhere to anyone. They’ll provide nothing toward the roads they use to transport their products, the school systems that educate their workers, the Army Corps of Engineers that protects factories from floods.

If countries don’t work together to stop corporations from playing one against the other, workers will get stuck with all of the costs. That’s what’s happening under the GOP tax scam. The tax changes were supposed to benefit middle-class workers. But they do not.

An analysis of the Senate tax plan, released this week by the Joint Committee on Taxation, which is the official nonpartisan review agency serving Congress, showed the scam would give large tax cuts to corporations and millionaires while raising the levies charged to families earning $10,000 to $75,000 – that’s low-income and middle-class families.

To help pay for big fat tax cuts for millionaires and zeroed-out taxes for corporations, Republicans plan to slash programs crucial to workers – like Medicare and Medicaid – and vital deductions, like those for property taxes and student loan interest.

Just like NAFTA, this GOP tax scheme is a scam, a bait-and-switch ruse. Workers pay more and get less – fewer government services and far fewer job opportunities. This time, their jobs won’t just be going south of the border. They’ll be shipped anyplace in the world touting the lowest tax rates.

Last night, straight down party lines, Republicans voted to give millionaires and billionaires a massive tax cut and to raise taxes on millions of hard working Americans.

“Today’s vote is a missed opportunity to deliver the tax reform we need for middle class families and small businesses,” said Congresswoman Annie Kuster. “I strongly support reform that starts with the goal of providing tax relief for those in the economy who need it most. This bill is little more than a giveaway to big corporate interests and wealthy individuals while creating losers among many middle class families who will see their taxes increase in the coming years.”

“The tax bill that House Republicans passed today seeks to steal from the vast majority of Americans to benefit the very few. This is an attack on our economic security and on the fabric of our nation,” said Congresswoman Carol Shea-Porter. “House Republicans’ tax scam is loaded with provisions to help the wealthiest: it eliminates the estate tax, which will only be paid by an estimated 5,500 super-wealthy Americans this year, and slashes the corporate tax rate claimed by the biggest businesses. Meanwhile, it raises taxes on many middle-class families, and it sets small benefits for working families to expire in five years – while making cuts for corporations permanent. And make no mistake about it: these cuts will take money away from needed national security investments at this dangerous moment in time.”

The Institute on Taxation and Economic Policy, confirmed Shea-Porter’s claim by stating, “12 percent of taxpayers would pay more in 2019 and 13 percent would pay more in 2027.” These increases unfairly hit middle class families.

This tax increase to the middle class comes primarily from the loss of “itemized deductions” that allow taxpayers to deduct things like mortgage interest, state and local taxes, student loan interest, qualifying work related expenses, and medical expenses.

“One reason for the variation across states is that taxpayers who live in places with higher state and local taxes may be more heavily impacted because those taxes would no longer be deductible on federal tax returns,” ITEP added.

“The bill the House approved today hurts older Americans now and in the future,” said Richard Fiesta, Executive Director of the Alliance for Retired Americans. “Eliminating the medical expense deduction means it will be harder for families with high medical expenses, most of whom are seniors, to make ends meet. The House Republican tax bill axes deductions that help working people so it can give more to the wealthiest.”

“The wealthy and corporations do not need these tax breaks. The vast majority of Americans understand that trickle-down economics does not work, and they disapprove of this plan. Retirees and working Americans know who this plan helps and who it hurts. And they will remember this when they vote in 2018,” Fiesta concluded.

Shea-Porter added, “This bill eliminates the deduction for high medical expenses claimed by over 40,000 Granite Staters and the student loan interest deduction that helps people saddled with student debt. It even takes away the modest $250 above-the-line deduction I fought to make permanent for almost 20,000 New Hampshire teachers – while keeping the golf course tax loophole. The nonpartisan Congressional Budget Office says the plan would explode the deficit by $1.7 trillion, triggering automatic cuts to Medicare. We all know our tax code desperately needs reform – but those reforms need to help the working people who are already losing out under our tax code, not give even more to the wealthiest 1% and the biggest corporations.”

The AFL-CIO says the bill is a “job killer” and rewards corporations for offshoring American jobs. Under the House proposal “U.S. tax rate on offshore profits from 35% to 0%,” creating a subsidy for outsourcing jobs that would cost taxpayers “$208 billion over 10 years.”

In their letter of opposition to the proposed tax plan, William Samuel, Director

Government Affairs Department at the AFL-CIO, called the proposal the “poster child for the failed ‘trickle-down’ economic theory that has never worked and has repeatedly stuck working people with the tab for tax giveaways for millionaires, big corporations, and Wall Street.”

Republicans are trying to pull the wool over our eyes in this massive tax scam. The plan would slash the corporate tax rate from 35% to 20% and repeals the Alternative Minimum Tax on “pass-through” businesses. A couple of examples of a “pass through” business are “small businesses” like hedge funds, law firms, realty investment companies, and some large corporations like Bechtel construction (the 9th largest single owned business in the US). Without the Alternative Minimum Tax these “pass through” businesses would not be required to pay any federal taxes at all.

NBC News is reporting “Trump and his heirs potentially could save more than $1 billion overall under the GOP tax proposal that the House of Representatives passed Thursday,” though he continues to say that the plan will not benefit him.

The progressive coalition, Not One Penny, supports tax reforms but not one penny in reductions to “millionaires, billionaires, and wealthy corporations.”

“The tax bill that passed the House today is an affront to the people that our leaders in Washington claim to represent. The GOP voted to cut taxes for millionaires, billionaires, and wealthy corporations, inevitably forcing cuts to programs working families depend on like Medicaid, Medicare, public education, and Social Security. While passing the largest middle-class tax hike in a generation, the GOP said ‘no thanks’ to helping working families this Thanksgiving,” said Not One Penny spokesman Tim Hogan. “The tax proposal that passed today is wildly unpopular with a majority of Americans, and voters won’t forget those who enabled this hypocrisy. Republicans’ vote today is one that will haunt them in the weeks and months ahead.”

Over the last month, in mobilizing against Republicans’ disastrous tax plan, the Not One Penny coalition has coordinated more than a hundred events and actions across the country to hold congressional Republicans accountable for pushing tax cuts for the wealthy and well-connected at the expense of working families.

Advocates and activists continue to mobilize in opposition to Republicans’ tax scam. From hundreds gathering together at rallies alongside Leaders Pelosi and Schumer, Members of Congress, and progressive allies on November 1 and November 15, to local grassroots activity across the country, Americans will continue to resist this toxic tax plan.

“Progressive groups have come together to prevent Republicans from rigging the system even further for the wealthy and well-connected, and we will not quit until this taxpayer-funded giveaway to millionaires, billionaires, and wealthy corporations is stopped dead in its tracks. After months of activity, we continue to mobilize thousands of activists to stop Republicans attempts to raise taxes on middle-class families. Congressional Republicans should take note: we will hold you accountable for every vote you take that threatens the health and financial security of your constituents,” Hogan added.

“This bill has always been about giving massive tax cuts to the wealthy and corporations, paid for by the rest of us — and our groups have been fired up about that from the beginning,” said Ezra Levin, Co-Executive Director of Indivisible, a member of the Not One Penny coalition. “Even before this tax fight became a health care fight, we had over 100 events in every corner of this country to oppose the Trump Tax Scam. Now that Republicans have explicitly included ACA repeal, our groups are even more energized than before.”

The bill now moves to the Senate where it is sure to face stiff opposition, especially after the news that Senator McConnell added the repeal of the Affordable Care Act to their tax plan.

Should-be Republican supporters are beginning to defect from the GOP tax plan because of the disastrous impact it would have on the American economy and the harm it would have on millions of middle-class families. Opposition to the plan includes:

Wisconsin Senator Ron Johnson, who said the plan benefits corporations over small businesses, and he finds the process being used to rush the bill “offensive.”

Arizona Senator Jeff Flake said, “I remain concerned over how the current tax reform proposals will grow the already staggering national debt by opting for short-term fixes while ignoring long-term problems for taxpayers and the economy.”

MaineSenator Susan Collins said, “I don’t think it’s a good idea from either a political or policy perspective.” Tennessee Senator Bob Corker said, “If I believe it’s going to add to the deficit, I’m not going to vote for it.”

Oklahoma Senator James Lankfordsaid, “It’s one thing to be able to cut taxes. It’s another thing to say how are we going to deal with our debt and deficit.”

Make sure to let your Senators know how you feel about this new proposal. The Senate Democrats are unanimous against the bill but in order to ensure this bill never reaches the President’s desk we need to get at least three Republicans to vote it down.

“We need bipartisan tax reform that simplifies our tax code to help small businesses and delivers meaningful relief to middle-class families. Sadly, the tax bill approved last night is a partisan effort that doesn’t meet any of those goals,” said Senator Shaheen. “This bill would add over one and a half trillion dollars to our national debt and hurt Granite State students, seniors and working families, all to provide tax cuts to the very wealthy and large corporations. I stand ready to work with Republicans and Democrats to reform our tax code, but we need a bill that’s fiscally responsible, helps grow our economy and prioritizes the middle class.”

So what are you supposed to do? If you’re, say, sitting around the Thanksgiving table when Great Uncle Chester starts berating your college-graduate niece about the fact that she’s living at home rather than in her own apartment…?

Start by finding common ground. There’s always something to agree on, if you just look hard enough. Even if it’s just a gentle restatement of what the other person said. “Yes, Uncle Chester, we all agree that college graduates should be able to find jobs that allow them to support themselves.”

Then, add a little reality in there. “But that doesn’t seem to be happening in the current economy. There are a whole lot of twenty-somethings who are still living at home.”

Try to use personal examples rather than just facts. “I remember what my neighbor’s son went through, when he graduated two years ago. It took him 18 months to find a job, and even then he earned barely enough for him to make his student loan payments.”

When you talk about facts, try to frame them as a question, not a statement. “Don’t you think that the economy has changed from when you graduated college? Remember how working in a bank used to be a highly-respected job? Did you know that, these days, almost one-third of bank tellers need food stamps?”

Don’t push too hard. With Uncle Chester, you might not be able to persuade him of anything other than that he should stop berating your niece. (And if you push any further, the conversation might get loud and become a “nobody’s going to win this” argument.)

Is Mildred still listening? If she looks interested, rather than angry, give her a few more facts. “Did you know that corporations are spending literally trillions of dollars buying back their own stock? Rather than building new factories or hiring new employees, they’re buying back shares of their own stock in order to keep stock prices high.”

Is she still listening? “I wonder what would happen to our tax rates, if corporations were paying taxes at the same rate they used to, before the SEC started allowing companies to buy back their own stock. Don’t you think that we might be paying less in taxes?”

Add a story. “Gosh, I wonder if this is why Macy’s is having such a hard time. None of my friends are planning to do their Christmas shopping there. It seems like everybody is shopping discount stores or making their gifts, this year.”

Use questions. “How can the economy recover, if ordinary people don’t have money to spend? Did you know that one in ten American jobs is in retail? What’s going to happen to that sector of the economy if wages stay stagnant? What’s going to happen to the rest of the economy?”

Happy Thanksgiving! I hope the conversation around your dinner table is a peaceful one.

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But if the conversation turns to Paris and Syrian refugees, please be especially careful. Fear is one of the most basic human emotions… it’s also one of the most destructive… and one of the easiest to manipulate.

Journalist Naomi Klein is the author of “The Shock Doctrine: The Rise of Disaster Capitalism.” She’s done a lot of research into how corporatists use disasters to push through political change. Read her work about the aftermath of Hurricane Katrina here.

“For more than three decades, [economist Milton] Friedman and his powerful followers had been perfecting this very strategy: waiting for a major crisis, then selling off pieces of the state to private players while citizens were still reeling from the shock, then quickly making the ‘reforms’ permanent. In one of his most influential essays, Friedman articulated contemporary capitalism’s core tactical nostrum, what I have come to understand as the shock doctrine. He observed that ‘only a crisis— actual or perceived—produces real change.’ ”

I think of her work every time someone mentions the Bush tax cuts. Back in 2001, the federal government had a budget surplus; and in the first few weeks of September, the Washington Post did a poll that found 57% of Americans wanted the Bush tax cuts reversed, in order to preserve that surplus. Then 9/11 happened. And a decade and a half later, we still haven’t gotten tax rates restored to Clinton-era levels… and the federal debt has increased by $12.4 trillion. (And we’re being told we need to cut Social Security, rather than restore the tax rates that President Bush cut even further “while citizens were still reeling from the shock” of 9/11.)

The Paris attacks renewed the atmosphere of fear that I remember after 9/11… and we’ve already seen how some politicians want to use that fear to change government policies. The good news is: my Facebook feed is full of people pushing back against these proposals, questioning them and using historical analogies to say “This is not what America stands for.” The bad news is: Facebook feeds are determined by an algorithm that tends to reinforce what people already believe.

So… when the conversation turns to Paris, and ISIS, remember the advice above. Arguing isn’t going to help. You need to find some way to help the people you’re talking with step away from their fear, and step into the reality that their fear allows them to be manipulated. Find something to say that you both agree on – most people agree that refugees should be vetted before being resettled – and work from there.

Last year the Republicans in the House pushed to cuts the SNAP program by $5 billion dollars over the next ten years. These draconian cuts reduced benefits to millions of hungry children. The GOP claims we need to balance the budget and they refuse to make changes to the tax rates, which would lead to higher revenues. “NO NEW TAXES!” Republicans across the country have vowed, even signed pledges, not to raise taxes or create any new taxes. Because the Republicans are unwilling to make changes to our tax system, they insist on making cuts to programs like SNAP, to balance our budget.

Our taxes help to pay for everything from the town snowplow driver to the roads we drive on. They pay for the schools and the teachers who educate our children. They pay for the police officers and firefighters who keep us safe, day and night. That is what our taxes pay for. Taxes are the financial foundation that our community is based on.

Nationally our taxes pay for so many things that it would take 1000 pages just to list them all. The US Government helps to fund businesses large and small, research to make our lives better, and programs designed to keep people out of poverty. Again our taxes are there to create a better society to live in.

Think about what America would look like if we did not pay taxes? How would we get from place to place without roads? Or airports? It is truly scary to think about.

This explains why people become so outraged when politicians make drastic cuts to social assistance programs like the Supplemental Nutrition Assistance Program (SNAP).

What if there was a way that we could reverse the cuts to SNAP, reduce our national debt, and build a better community all at the same time, all without creating new taxes. Would you be in favor of that? I know that I would.

The answer is a simple as making sure that everyone is paying their fair share of the taxes. It all comes from closing the loopholes in the tax code that allow corporations to avoid paying their fair share.

For example, from 2008-2013 General Electric made $33 billion dollars in profits and received a tax rebate. GE received $2.9 billion dollars in federal tax refunds in the last 5 years. If this continues the federal government will give GE over $5.8 billion dollars in tax refunds over a ten-year period. That is $800 million dollars more that all of the SNAP cuts in the same ten years.

How is that even possible? How does a highly profitable company get a tax refund of billions of dollars? Due to loopholes and the offshoring of profits, GE effectively got their tax rate to -9%, hence the refund. Last year my effective tax rate was 18% and I did not make $100 million dollars.

The worst part is GE is not alone in this atrocity. Boeing, Verizon, Bank of America, Citigroup all made billions in profits and had effective tax rates so low, they did not have to pay taxes, they received a refund. In fact Boeing (-2% tax rate) and Verizon (-2% tax rate) alone collected over $1.2 billion dollars in tax refunds over the last five years.

The list goes on. Pfizer pharmaceuticals, who are quickly becoming the master of offshoring profits, made $43 billion between 2010-2012, and received a $2.2 billion dollar refund. FedEx made $2.7 billion dollars in profits in 2011 received a refund of $135 million dollars. Honeywell made $3 billion and received $510 million in refunds.

That is an extra $4 billion in tax refunds to corporations who are exporting jobs, and raking in massive amounts of profits. This does not even include the trillions of dollars given to Citigroup and Bank of America during the “Wall Street bailout.”

The same corporations that are reaping huge rewards from the US Government are pushing to further destroy our social safety net. Many of the CEO’s are calling for deeper cuts to Social Security and other programs. They are also pushing to raise the eligibility age requirement for Medicare and Social Security.

We could restore all the cuts to SNAP program and put billions towards the deficit, just by making sure that these corporations are just paying their fair share. Our communities are staving for funds and a handful of corporations are walking away with billions of our tax dollars.